By Cynthia Kimola
Did you open a bank account when you were single and now you’re married? Took out an insurance policy when you didn’t have kids but now you do? Had put down your husband as a beneficiary of your pension scheme but now the two of you are not together? Then it’s time to update your beneficiary/next of kin records.
Next of kin refers to a person’s closest living blood relative and they have inheritance rights if a person dies without a will and has no spouse and/or children. On the other hand a beneficiary can be any person or entity that you (the benefactor) name to get the proceeds of your funds when you depart and by law they receive all or a portion of the proceeds.
This section of the form is very important and you should take careful consideration when filling it as you are delegating who you would want your savings and investments to go to upon your death. This is standard procedure whenever you open a bank account, take out an insurance policy, personal pension plan and a host of other financial assets.
Like a majority of people, you must have opened your first bank account while still in campus when the bank’s marketing teams visited your university to conduct activations. You filled the required forms, gave out the necessary documentation and finally got your first ATM card. However do you remember whom you listed as your next of kin or beneficiary in the forms? That name you put down, dictates whom your financial assets will go to when you pass on.
You may have listed either your parents, siblings or both as your beneficiaries. The same may have also happened when you took out life insurance policies when you landed your first job. Back then you were young, still single and with minimal responsibilities but now seasons have changed and now you may be married, divorced or widowed, with or without kids. These life changes should be reflected on your financial documents, to match your current status so that the people you truly care about become the recipients of your funds.
You’ve worked hard for your money and you wouldn’t want your dependents to suffer when you’re gone because you failed to keep your records up to date. Under the Retirement Benefits Authority regulations in Kenya; if you are a member of a particular pension scheme; the rules provide that upon the death of a member, the benefits payable from the scheme shall be paid to the nominated beneficiaries. If a member has not nominated any beneficiaries, the trustees have a duty to act in the beneficiaries’ best interest. There are scenarios where the trustees’ decisions have been contested at the Retirement Benefits Authority and this causes unnecessary delays in the payment of the benefits. This is particularly disheartening when it comes to life insurance, where the main aim is to provide resources for a particular purpose, such as to help cover funeral expenses or to replace income. It is therefore important to ensure your beneficiary information is accurate and up to date by getting in touch with the financial institutions or insurance companies where you hold these financial assets.
Indicating the correct beneficiaries for your assets means that your money will be distributed to them without requiring a will or other legal documents. This gives you peace of mind knowing that once you’re gone the people you truly care about will not be left stranded or have to go through court to access your wealth.